Investors in the Indian Telecom Space focused on two important issues – Indian Currency and the 4G-LTE Space.
Foreign Investors Wary of Indian Government Flip Flop Policies – We believe that, despite the government’s decision to allow 100% FDI and a depreciating rupee, the experience of some of the players – such as Telenor, Etisalat (licence cancellations), and Vodafone (tax dispute) – has not been encouraging. Separately, the last set of new players giving up their pan-India dreams and shutting down circles suggests that it is hard to make a case for a foreign player to take the new-entrant route to enter the Indian telecom space.
Reliance Jio Infocomm needs Lower Spectrum Band to Fulfill Data Dreams WE saw Scepticism around Reliance Jio Infocomm. Most investors were concerned about Reliance Jio 4G and a possible disruption. Reliance Jio will need good-quality spectrum (spectrum in the 900 MHz or 700 MHz band, or both) to be disruptive while its spectrum holdings in the 2.3 GHz mean that it cannot afford to be disruptive. This implies that company may have to invest an incremental USD6-7bn and that, without such an investment, it will be hard for Reliance Jio to capture market share from incumbent operators.
There was little in the way of questions on the tower space and Bharti Infratel, indicating a continuing lack of interest on the part of domestic investors. On Idea Cellular, investors seemed to be in a wait-and-see mode and were looking for more clarity on fund-raising plans.